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Gauging a company’s profitability can be difficult because of the many options available – one interesting idea is to compare a company’s profit margins to its industry averages. Companies with higher margins are taking a greater percentage of sales as profits, and they have tighter control over their cost structure.

We ran a screen on the healthcare sector for stocks with high profitability, beating their industry averages on gross, operating, or pretax margins.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬


We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think these companies have strong profitability? Use this list as a starting point for your own analysis.

List sorted by difference between gross margin and industry.

1. DaVita, Inc. (NYSE:DVA): Provides kidney dialysis services in the United States. Market cap of $6.80B. TTM gross margin at 32.02% vs. industry gross margin at 21.04%. TTM operating margin at 15.83% vs. industry operating margin at 8.41%. TTM pretax margin at 11.17% vs. industry pretax margin at 6.77%. The stock has gained 2.06% over the last year.

2. Aetna Inc. (NYSE:AET): Operates as a diversified health care benefits company in the United States. Market cap of $14.35B. TTM gross margin at 29.65% vs. industry gross margin at 21.04%. TTM operating margin at 9.68% vs. industry operating margin at 8.41%. TTM pretax margin at 8.25% vs. industry pretax margin at 6.77%. Might be undervalued at current levels, with a PEG ratio at 0.77, and P/FCF ratio at 6.5. The stock has gained 30.34% over the last year.

3. Lifepoint Hospitals Inc. (NASDAQ:LPNT): Operates general acute care hospitals in non-urban communities in the United States. Market cap of $1.71B. TTM gross margin at 29.55% vs. industry gross margin at 21.04%. TTM operating margin at 10.54% vs. industry operating margin at 8.41%. TTM pretax margin at 7.38% vs. industry pretax margin at 6.77%. The stock is a short squeeze candidate, with a short float at 10.01% (equivalent to 9.71 days of average volume). It's been a rough couple of days for the stock, losing 8.51% over the last week.

4. Chemed Corp. (NYSE:CHE): Provides hospice care, and repair and cleaning services in the United States. Market cap of $959.01M. TTM gross margin at 28.35% vs. industry gross margin at 21.04%. TTM operating margin at 11.27% vs. industry operating margin at 8.41%. TTM pretax margin at 10.11% vs. industry pretax margin at 6.77%. The stock is a short squeeze candidate, with a short float at 10.79% (equivalent to 6.92 days of average volume). The stock has performed poorly over the last month, losing 16.68%.

5. IPC The Hospitalist Company, Inc. (NASDAQ:IPCM): Provides hospitalist services in the United States. Market cap of $727.47M. TTM gross margin at 27.29% vs. industry gross margin at 21.04%. TTM operating margin at 10.46% vs. industry operating margin at 8.41%. TTM pretax margin at 10.28% vs. industry pretax margin at 6.77%. The stock is a short squeeze candidate, with a short float at 16.37% (equivalent to 16.91 days of average volume). It's been a rough couple of days for the stock, losing 6.72% over the last week.

6. Zimmer Holdings, Inc. (NYSE:ZMH): Engages in the design, development, manufacture, and marketing of orthopaedic reconstructive implants, spinal and trauma devices, dental implants, and related surgical products. Market cap of $8.55B. TTM gross margin at 83.55% vs. industry gross margin at 65.61%. TTM operating margin at 28.79% vs. industry operating margin at 14.64%. TTM pretax margin at 20.36% vs. industry pretax margin at 11.24%. The stock has lost 11% over the last year.

7. Smith & Nephew plc (NYSE:SNN): Develops, manufactures, markets, and sells medical devices in the orthopaedics, endoscopy, and advanced wound management sectors worldwide. Market cap of $8.15B. TTM gross margin at 80.38% vs. industry gross margin at 65.61%. TTM operating margin at 21.89% vs. industry operating margin at 14.64%. TTM pretax margin at 21.18% vs. industry pretax margin at 11.24%. The stock has lost 9.61% over the last year.

8. Align Technology Inc. (NASDAQ:ALGN): Designs, manufactures, and markets the invisalign system for treating malocclusion or the misalignment of teeth. Market cap of $1.87B. TTM gross margin at 79.51% vs. industry gross margin at 65.60%. TTM operating margin at 20.02% vs. industry operating margin at 14.64%. TTM pretax margin at 17.60% vs. industry pretax margin at 11.24%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.18). The stock is a short squeeze candidate, with a short float at 7.19% (equivalent to 7.15 days of average volume). The stock has gained 27.47% over the last year.

9. St. Jude Medical Inc. (NYSE:STJ): Develops, manufactures, and distributes cardiovascular and implantable neurostimulation medical devices worldwide. Market cap of $10.93B. TTM gross margin at 79.16% vs. industry gross margin at 65.60%. TTM operating margin at 25.94% vs. industry operating margin at 14.64%. TTM pretax margin at 20.46% vs. industry pretax margin at 11.24%. It's been a rough couple of days for the stock, losing 7.28% over the last week.

10. ArthroCare Corporation (NASDAQ:ARTC): Develops, manufactures, and markets surgical products primarily based on its minimally invasive patented Coblation technology. Market cap of $819.52M. TTM gross margin at 76.22% vs. industry gross margin at 65.60%. TTM operating margin at 20.33% vs. industry operating margin at 14.78%. TTM pretax margin at 13.84% vs. industry pretax margin at 11.36%. The stock has lost 4.55% over the last year.

11. Edwards Lifesciences Corp. (NYSE:EW): Offers products and technologies designed to treat advanced cardiovascular disease worldwide. Market cap of $7.66B. TTM gross margin at 74.09% vs. industry gross margin at 65.60%. TTM operating margin at 18.05% vs. industry operating margin at 14.64%. TTM pretax margin at 17.38% vs. industry pretax margin at 11.24%. The stock has lost 14.1% over the last year.

12. Stryker Corp. (NYSE:SYK): Operates as a medical technology company worldwide. Market cap of $17.93B. TTM gross margin at 70.28% vs. industry gross margin at 65.60%. TTM operating margin at 24.09% vs. industry operating margin at 14.64%. TTM pretax margin at 20.18% vs. industry pretax margin at 11.24%. The stock has lost 12.18% over the last year.

13. Masimo Corporation (NASDAQ:MASI): Develops, manufactures, and markets noninvasive patient monitoring products worldwide. Market cap of $1.17B. TTM gross margin at 69.89% vs. industry gross margin at 65.60%. TTM operating margin at 20.62% vs. industry operating margin at 14.78%. TTM pretax margin at 20.52% vs. industry pretax margin at 11.36%. The stock is a short squeeze candidate, with a short float at 8.86% (equivalent to 8.44 days of average volume). The stock has performed poorly over the last month, losing 12.68%.

14. The Cooper Companies Inc. (NYSE:COO): Develops, manufactures, and markets healthcare products serving the vision care and women's healthcare markets worldwide. Market cap of $3.08B. TTM gross margin at 67.51% vs. industry gross margin at 65.60%. TTM operating margin at 19.07% vs. industry operating margin at 14.64%. TTM pretax margin at 14.48% vs. industry pretax margin at 11.24%. The stock has had a couple of great days, gaining 8.01% over the last week.

15. CR Bard Inc. (NYSE:BCR): Engages in the design, manufacture, packaging, distribution, and sale of medical, surgical, diagnostic, and patient care devices worldwide. Market cap of $7.24B. TTM gross margin at 66.21% vs. industry gross margin at 65.61%. TTM operating margin at 28.39% vs. industry operating margin at 14.64%. TTM pretax margin at 19.07% vs. industry pretax margin at 11.24%. The stock has lost 5.02% over the last year.

*Profitability data sourced from Fidelity, all other data sourced from Finviz.

Source: 15 Healthcare Stocks With Impressive Profitability